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Tuesday, October 14, 2008

You might be wondering how this calculator differs from the one we link to, which is based on the Tax Policy Center numbers. The Obama site has this helpful FAQ which explains:

Why are the results different from those reported by the Tax Policy Center, or what I saw on other sites like obamataxcut.com?

The Tax Policy Center (TPC) took a different approach to analyzing the candidates' tax plans. Their analysis is not a 'calculator' of how your own tax bill would change next year, given your personal characteristics (as our tax calculator is). Theirs is rather a calculation of how groups of people in broad income categories would fare under the candidates' policies. TPC includes the effects of other features of the tax code, such as corporate tax cuts, that we left out since the tax calculator calculates only how individuals' income taxes change (see below).

We also calculate the change in your taxes assuming that you have the income that you input—an obvious choice in our context—whereas their calculation takes existing data on individual behavior and assumes that the individuals in this data change their behavior in response to tax cuts. While not all of TPC's assumptions accurately reflect the impact of Obama's plan, both approaches are legitimate and important. They're simply separate exercises. The difference between TPC's "average tax change" figures and the individual outputs here can be explained by these differences. This also explains the differences between this calculator and obamataxcut.com, which is based on TPC's representative taxpayer tables.

That's clear enough. The FAQ has a lot more details, which is a good indication that the calculator is not rigged but is an attempt to give you an honest estimate of how your taxes would change under Obama's proposals.

4 comments:

the calculator is not rigged but is an attempt to give you an honest estimate of how your taxes would change under Obama's proposals

Agreed. Obama's team has done the work to address the problems I had with the Tax Policy Center numbers when making ObamaTaxcut.com -- not being an economist or tax pro, I decided to stick with their numbers rather than make calculations I'm not qualified to make. For example, I include the TPC's calculation of corporate tax effects since this is include in their widely reported change in after-tax income numbers, but this is not a good way to talk about individual income tax. This new site is a lot better.

For a more detailed calculation, you should also check out electiontaxes.com

Which is it!? You say the following regarding "Obama's 95% Illusion", "... never believe anything you read in a Wall Street Journal editorial. For trustworthy analysis of tax proposals, the non-partisan Tax Policy Center is the only place to go."

Then when a calculator appears based on the Tax Policy Center and you do not like what it delivers you create your own? What happened to "... the non-partisan Tax Policy Center is the only place to go."

Just to clear, we--meaning Economists for Obama--are not connected to the campaign and haven't created any tax calculator.

We link to ObamaTaxCut.com, which is based on the Tax Policy Center numbers, and TaxCut.BarackObama.com, which is the campaign's calculator.

As the FAQ above explains, they calculate slightly different things but are both accurate. The main difference between the two is that the TPC allocates part of corporate taxes to individuals, while the campaign's does not.